Dollar’s primacy in danger as China, Brazil ditch Uncle Sam
The yuan’s rise threatens America’s power, but lawmakers are fixated on TikTok.
The American dollar is losing its place as the global currency of exchange.
Last week, two of the world’s largest countries, China and Brazil, struck a deal to trade in their own currencies, no longer using the dollar, per a report in Barron’s.
The deal will enable China, the top rival to US economic hegemony, and Brazil, the biggest economy in Latin America, to conduct their massive trade and financial transactions directly, exchanging yuan for reais and vice versa instead of going through the dollar.
“The expectation is that this will reduce costs ... promote even greater bilateral trade and facilitate investment,” the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement.
China is Brazil’s biggest trading partner, with a record $150.5 billion in bilateral trade last year.
A world where the U.S. dollar is no longer the top medium of exchange is a world where America has less influence. The People’s Republic of China is a communist state that is seeking to supplant the United States and around the world.
To the extent America is worried about China’s rise, that concern manifests in hearings about the spread of TikTok. The dollar’s loss of status to the yuan is a more fundamental threat than a social media app Americans freely choose to download.
And yet it was TikTok that lawmakers spent hours berating last week, the same week the Brazil-China currency exchange was announced.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.